The Ensign Group Meets Earnings Guidance of $1.27 Per Share for 2015; Reaffirms 2016 Projections

MISSION VIEJO, Calif., Feb. 10, 2016 (GLOBE NEWSWIRE) -- The Ensign Group, Inc. (Nasdaq:ENSG), the parent company of the Ensign™ group of skilled nursing, rehabilitative care services, home health, home care, hospice care, assisted living and urgent care companies, today reported operating results for the fourth quarter and full year 2015.

Quarter and Fiscal Year Highlights Include:

Adjusted earnings per share were $1.27 for the year, an increase of 16.4% over the prior year, and $0.35 for the quarter, an increase of 29.6% over the prior year quarter;

Consolidated adjusted net income climbed 31.6% over the prior year to $66.1 million, and 44.7% over the prior year quarter to $18.5 million;

Consolidated adjusted EBITDAR was $221.3 million for the year, an increase of 38.8%, and $63.1 million for the quarter, an increase of 43.5%;

Same-store revenue for all segments grew by 6.9% over the prior year, and by 7.9% over the prior year quarter, and same-store TSA
revenue grew by 6.4% over the prior year, and by 7.5% over the prior year quarter;

Same store skilled revenue mix increased by 115 basis points over the prior year to 52.9%;

Cornerstone Healthcare, Inc., our home health and hospice subsidiary, grew its revenue by $35.8 million to $90.4 million for the year, an increase of 65.7% over the prior year; and

Consolidated revenues for the year were up $314.4 million or 30.6% over the prior year to $1.34 billion, and consolidated revenues for the quarter were up $96.3 million or 34.8% over the prior year quarter to $373.2 million.

Operating Results

"We are pleased to report that operating
results met consensus and our annual earnings guidance, which was increased three times during 2015, with adjusted earnings per share of $1.27 for the year," said Ensign's President and Chief Executive Officer Christopher Christensen. He stated that "Although there were some temporary challenges in some operations, the overall strength inherent in Ensign's local approach to healthcare continues to drive steady improvements in each distinct healthcare market." He credited the 2015 results to the local leaders and their teams, highlighting their ability to innovate in the midst of an ever-changing healthcare environment.

Mr. Christensen reiterated that as of December 31, 2015, the company had 68 operations in the recently acquired bucket, which is the highest number of
operations in that category in the organization's history. "While we are pleased with the contribution of a few of our newly acquired facilities to our 2015 results, most of our newly acquired operations have not yet contributed to our results in any meaningful way," he said. He also noted that "our recent growth puts us in an unprecedented position for continued organic improvement in 2016 and beyond as these recently acquired operations begin to meet their potential, most of which we expect to occur towards the end of 2016."

"We are also pleased to be reaffirming our annual guidance for 2016, projecting annual revenue of between $1.53 billion and $1.58 billion and annual earnings per share guidance between $1.43 and $1.50 per diluted share," Christensen continued. He also emphasized that, given the
number of new operations acquired last year, management expects much of the increase in performance in 2016 to occur in the later part of the year, adding that it often takes several quarters for newly acquired facilities to perform. He also noted that, "As we often remind you, our results are not symmetrical from quarter to quarter, especially in periods of significant growth, but we have been able to project performance fairly accurately on an annual basis."

Chief Financial Officer Suzanne Snapper reported that Ensign's balance sheet remains strong in spite of our record acquisition activity, with its conservative adjusted net-debt-to-EBITDAR ratio of 3.37x at year end. Ms. Snapper added that "as a result of our ever improving discipline, we recently increased our revolving line of credit to $250
million, an increase of $100 million." She further noted that as of December 31, 2015 the company had $41.6 million in cash on hand.

Ms. Snapper also reported that consolidated revenues in for the year were up 30.6% over the prior year to a record $1.34 billion and consolidated adjusted EBITDAR for the year grew by 38.8% to $221.3 million. Fully diluted adjusted earnings per share were $0.35 for the quarter and adjusted net income was $18.5 million. Fully diluted GAAP earnings per share were $1.06 for the year and $0.26 for the quarter.

A discussion of the company's use of non-GAAP financial measures is set forth below. A reconciliation of net income to adjusted EBITDAR and
adjusted EBITDA, as well as a reconciliation of GAAP earnings per share and net income to adjusted net earnings per share and adjusted net income, appear in the financial data portion of this release.

More complete information is contained in the Company's 10-K, which was filed with the SEC today and can be viewed on the Company's website at http://www.ensigngroup.net.

Quarter Highlights

During the quarter, Ensign paid a quarterly cash dividend of $0.04 per share of its common stock, an increase of 6.7% over the prior year. This is the thirteenth consecutive year Ensign has
increased its dividend, signaling the board's and management's continued confidence in Ensign's operating model and its ability to return long-term value to shareholders. Ensign has been a dividend-paying company since 2002.

In addition, the Company completed a 2 for 1 split of its outstanding stock, increasing the number of basic outstanding shares to approximately 51.4 million as of December 31, 2015. Mr. Christensen noted that the stock split made Ensign stock more affordable for a wider range of investors, increasing the liquidity and trading volumes.

On February 5, 2016, Ensign also increased its revolving credit facility by $100 million to an aggregate of $250 million, $111.8 million of which was drawn as of February 5, 2016. The amendment reduced the LIBOR-based interest rate by 50 basis points and
extended the termination date for the revolving commitment to February 5, 2021, among other things.

Also during the quarter and since, affiliates of Ensign acquired 7 skilled nursing facilities and opened 3 healthcare resorts, including:

In Kansas, The Healthcare Resort of Kansas City, featuring a 70-bed licensed transitional care operation and 30 private assisted living suites under a long-term lease;

In Kansas, The Healthcare Resort of Olathe, featuring a 70-bed licensed transitional care operation and 30 private assisted living suites under a long-term lease;

These additions bring Ensign's growing portfolio to 187 healthcare operations, thirty-two of which are owned, fourteen hospice agencies, fifteen home health agencies, three home care businesses and seventeen urgent care clinics across 14 states. Mr. Christensen reaffirmed that Ensign
continues to actively seek transactions to acquire real estate and to lease both well-performing and struggling skilled nursing, assisted living and other healthcare related businesses in new and existing markets.

2016 Guidance Reaffirmed

Management also reaffirmed its 2016 guidance, projecting annual revenue of between $1.53 billion and $1.58 billion and earnings per share guidance to between $1.43 and $1.50 per diluted share for 2016. Management's guidance is based on diluted weighted average common shares outstanding of 53.3 million, which includes the impact of the 2 for 1 stock split completed in the fourth quarter of 2015. In addition, the guidance assumes, among other things, anticipated Medicare and Medicaid reimbursement
rate increases net of provider taxes, tax rates of 38.5% and acquisitions closed. It also excludes acquisition-related costs and amortization costs related to intangible assets acquired, stock based compensation, implementation costs for system improvements, costs incurred to recognize income tax credits and costs incurred for facilities currently being constructed and other start-up operations.

Conference Call

A live webcast will be held Thursday, February 11, 2016 at 10:00 a.m. Pacific time (1:00 p.m. Eastern time) to discuss Ensign's fourth quarter and fiscal year 2015 financial results. To listen to the webcast, or to view any financial or statistical information required by SEC Regulation G, please visit the Investors Relations section of Ensign's website at http://investor.ensigngroup.net. The webcast will be recorded, and will be available for replay via the website until 5:00 p.m. Pacific Time on Friday, March 25, 2016.

About Ensign™

The Ensign Group, Inc.'s independent operating subsidiaries provide a broad spectrum of skilled nursing and assisted living services, physical, occupational and speech therapies, home health and hospice services, urgent care services and other rehabilitative and healthcare services at 187 facilities, fourteen hospice
agencies, fifteen home health agencies, three home care businesses and seventeen urgent care clinics in California, Arizona, Texas, Washington, Utah, Idaho, Colorado, Nevada, Iowa, Nebraska, Oregon, Wisconsin, Kansas and South Carolina. More information about Ensign is available at http://www.ensigngroup.net. Each of these operations is operated by a separate, independent operating subsidiary that has its own management, employees and assets. References herein to the consolidated "company" and "its" assets and activities, as well as the use of the terms "we," "us," "its" and similar terms, are not meant to imply that The Ensign Group, Inc. has direct operating assets, employees or revenue, or that any of the operations, the home health and hospice businesses, the Service Center or the captive insurance subsidiary are operated by
the same entity. More information about Ensign is available at http://www.ensigngroup.net.

This press release contains, and the related conference call and webcast will include, forward-looking statements that are based on management's current expectations, assumptions and beliefs about its business, financial performance, operating results, the industry in which it operates and other future events. Forward-looking statements can often be identified by words such as "anticipates,"
"expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding growth prospects, future operating and financial performance, and acquisition activities. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to materially and adversely differ from those expressed in any forward-looking statement.

These risks and uncertainties relate to the company's business, its industry and its common stock and include: reduced prices and reimbursement rates for its services; its ability to acquire, develop, manage or improve operations, its ability to
manage its increasing borrowing costs as it incurs additional indebtedness to fund the acquisition and development of operations; its ability to access capital on a cost-effective basis to continue to successfully implement its growth strategy; its operating margins and profitability could suffer if it is unable to grow and manage effectively its increasing number of operations; competition from other companies in the acquisition, development and operation of facilities; its ability to defend claims and lawsuits, including professional liability claims alleging that our services resulted in personal injury, and other regulatory-related claims; and the application of existing or proposed government regulations, or the adoption of new laws and regulations, that could limit its business operations, require it to incur significant expenditures or limit its ability to relocate its operations
if necessary. Readers should not place undue reliance on any forward-looking statements and are encouraged to review the company's periodic filings with the Securities and Exchange Commission, including its Form 10-K, for a more complete discussion of the risks and other factors that could affect Ensign's business, prospects and any forward-looking statements. Except as required by the federal securities laws, Ensign does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changing circumstances or any other reason after the date of this press release.

Cost of services (exclusive of rent, general and administrative and depreciation and amortization expense shown separately below)

221,137

(5,060

)

(1)(4)(5)

216,077

822,669

(16,966

)

(1)(4)(5)

805,703

Rent—cost of services

18,480

(402

)

(6

)

18,078

48,488

(1,941

)

(6

)

46,547

General and administrative expense

12,525

(200

)

(2)(3)(4)

12,325

56,895

(9,234

)

(2)(3)(4)

47,661

Depreciation and amortization

5,087

(371

)

(7

)

4,716

26,430

(1,265

)

(7

)

25,165

Total expenses

257,229

(6,033

)

251,196

954,482

(29,406

)

925,076

Income from operations

19,640

1,624

21,264

72,924

14,901

87,825

Other income (expense):

Interest expense

(486

)

46

(440

)

(12,976

)

6,517

(6,459

)

Interest income

159

-

159

594

-

594

Other
expense, net

(327

)

46

(281

)

(12,382

)

6,517

(5,865

)

Income before provision for income taxes

19,313

1,670

20,983

60,542

21,418

81,960

Tax Effect on Non-GAAP Adjustments

643

8,246

Tax True-up for Effective Tax Rate

(1,082

)

(3,492

)

Provision for income taxes

8,517

(439

)

(8

)

8,078

26,801

4,754

(8

)

31,555

Net income

10,796

2,109

12,905

33,741

16,664

50,405

Less: net (loss) income attributable to noncontrolling interests

(715

)

807

92

(2,209

)

2,370

161

Net income attributable to The Ensign Group, Inc.

$

11,511

1,302

$

12,813

$

35,950

14,294

$

50,244

Net income per share

Basic:

$

0.26

$

0.28

$

0.80

$

1.12

Diluted:

$

0.25

$

0.27

$

0.78

$

1.09

Weighted average common shares outstanding:

Basic

45,038

45,038

44,682

44,682

Diluted

46,756

46,756

46,190

46,190

_____________________

(1) Represents acquisition-related costs of $453 and $672 for the three months and year ended ended December 31, 2014, respectively.

(2) Represents costs of $45 and $138 for the three months and year ended December 31, 2014, respectively, incurred to recognize income tax credits.

(3) Represents costs of $155 and $9,026 for the three months and year ended December 31, 2014, incurred related to the Company's spin-off of real estate assets to CareTrust REIT
(CTRE) (the Spin-Off).

(4) Represents revenues and expenses incurred at the three independent living operations transferred to CTRE on June 1, 2014 in connection with the Spin Off, excluding rent expense recognized in note (6) below.

(c) Breakup fee, net of costs, received in connection with a
public auction.

(d) Costs incurred to acquire an operation which are not capitalizable.

(e) Stock-based compensation expense incurred during the three months and year ended December 31, 2015. Adjusted EBITDA and EBITDAR for the three
months and year ended December 31, 2014 did not include non-GAAP adjustment related to stock-based compensation expense of $1.4 million and $5.2 million, respectively. If adjusted for stock-based compensation expense, Adjusted EBITDA for the three months and year ended December 31, 2014 would have been $27.3 million and $118.0 million, respectively, and Adjusted EBITDAR for the three months and year ended December 31, 2014 would have been $45.3 million and $164.6 million, respectively. EBITDA for the year ended December 31, 2014 reflects four month increase in rent expense as a result of the Spin-Off compared to twelve months increase in rent expense for the year ended December 31, 2015.

(f) Costs incurred for facilities currently being constructed and other start-up operations.

(g) Costs incurred related to new systems implementation.

(h) Professional service fees include costs incurred to
recognize income tax credits which contributed to a decrease in effective tax rate and expenses incurred in connection with the stock-split effected in December 2015.

(4) Transferred to CareTrust results represent the results at three independent living facilities which were transferred to CareTrust as part of the Spin-Off on June 1, 2014. These results were excluded from Same Facility for the nine months ended September 30, 2014 for comparison purposes.

THE ENSIGN GROUP, INC. SKILLED NURSING AVERAGE DAILY REVENUE RATES AND PERCENT OF SKILLED NURSING REVENUE AND DAYS BY PAYOR

The following table reflects the change in the skilled nursing average daily revenue rates by payor source, excluding services that are not covered by the daily rate:

Three Months Ended
December 31,

Same Facility

Transitioning

Acquisitions

Total

2015

2014

2015

2014

2015

2014

2015

2014

Skilled Nursing Average Daily Revenue Rates:

Medicare

$

574.76

$

564.79

$

487.80

$

461.91

$

517.23

$

561.52

$

556.02

$

556.58

Managed care

423.69

414.37

472.40

420.03

438.12

458.20

429.72

419.19

Other skilled

434.17

449.96

355.05

-

357.56

335.63

414.07

436.62

Total skilled revenue

494.90

493.66

481.99

447.91

456.37

465.21

484.53

488.76

Medicaid

209.78

185.42

183.69

174.56

195.45

191.46

204.84

184.92

Private and other payors

194.63

191.44

143.84

141.26

215.35

214.46

193.66

187.98

Total skilled nursing revenue

$

295.27

$

273.56

$

240.73

$

223.79

$

290.21

$

278.00

$

290.52

$

269.91

Year Ended December 31,

Same Facility

Transitioning

Acquisitions

Total

2015

2014

2015

2014

2015

2014

2015

2014

Skilled Nursing Average Daily Revenue
Rates:

Medicare

$

568.08

$

556.11

$

485.63

$

462.51

$

524.90

$

542.66

$

555.50

$

549.12

Managed care

419.39

412.26

462.72

456.88

443.60

448.43

427.16

416.74

Other skilled

456.62

447.26

331.93

253.00

361.20

321.73

436.41

437.08

Total skilled revenue

497.93

491.22

476.58

460.42

463.92

446.07

490.07

487.55

Medicaid

194.26

180.40

176.59

166.35

195.14

187.52

193.04

179.45

Private and other payors

193.90

189.28

145.30

149.56

209.51

209.85

192.04

185.79

Total skilled nursing revenue

$

286.65

$

269.72

$

234.36

$

219.98

$

288.53

$

264.21

$

283.31

$

265.41

The following tables set forth our percentage of skilled nursing patient revenue and days by payor source for the three months and year ended December 31, 2015 and 2014:

Three Months Ended December 31,

Same Facility

Transitioning

Acquisitions

Total

2015

2014

2015

2014

2015

2014

2015

2014

Percentage of Skilled Nursing Revenue:

Medicare

27.4

%

28.8

%

28.7

%

27.4

%

25.5

%

19.5

%

27.1

%

28.0

%

Managed care

16.1

15.5

13.6

12.5

23.2

24.0

17.5

15.9

Other skilled

7.6

6.9

0.2

-

7.3

7.8

7.2

6.5

Skilled mix

51.1

51.2

42.5

39.9

56.0

51.3

51.8

50.4

Private and other payors

8.0

8.9

9.4

10.2

6.8

9.0

7.7

9.0

Quality mix

59.1

60.1

51.9

50.1

62.8

60.3

59.5

59.4

Medicaid

40.9

39.9

48.1

49.9

37.2

39.7

40.5

40.6

Total skilled nursing

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Three Months Ended December 31,

Same Facility

Transitioning

Acquisitions

Total

2015

2014

2015

2014

2015

2014

2015

2014

Percentage of Skilled Nursing Days:

Medicare

13.9

%

14.0

%

14.2

%

13.3

%

14.3

%

9.7

%

14.0

%

13.6

%

Managed care

11.2

10.2

6.9

6.7

15.4

14.5

11.8

10.2

Other skilled

5.2

4.2

0.1

-

5.9

6.4

5.1

4.0

Skilled mix

30.3

28.4

21.2

20.0

35.6

30.6

30.9

27.8

Private and other payors

12.2

12.7

15.7

16.1

9.2

11.8

11.7

13.0

Quality mix

42.5

41.1

36.9

36.1

44.8

42.4

42.6

40.8

Medicaid

57.5

58.9

63.1

63.9

55.2

57.6

57.4

59.2

Total skilled nursing

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Year Ended December 31,

Same Facility

Transitioning

Acquisitions

Total

2015

2014

2015

2014

2015

2014

2015

2014

Percentage of Skilled Nursing Revenue:

Medicare

29.6

%

30.2

%

27.5

%

25.8

%

25.1

%

18.7

%

28.6

%

29.4

%

Managed care

15.9

15.1

14.8

14.4

23.3

20.9

17.2

15.3

Other skilled

7.4

6.4

0.2

-

6.5

8.9

6.8

6.1

Skilled mix

52.9

51.7

42.5

40.2

54.9

48.5

52.6

50.8

Private and other payors

8.1

9.0

9.7

11.4

8.0

8.6

8.2

9.1

Quality mix

61.0

60.7

52.2

51.6

62.9

57.1

60.8

59.9

Medicaid

39.0

39.3

47.8

48.4

37.1

42.9

39.2

40.1

Total skilled nursing

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Year Ended December 31,

Same Facility

Transitioning

Acquisitions

Total

2015

2014

2015

2014

2015

2014

2015

2014

Percentage of Skilled Nursing Days:

Medicare

14.9

%

14.6

%

13.3

%

12.2

%

13.8

%

9.1

%

14.6

%

14.2

%

Managed care

10.8

9.9

7.5

6.9

15.2

12.3

11.4

9.7

Other skilled

4.6

3.9

0.1

-

5.2

7.3

4.4

3.7

Skilled mix

30.3

28.4

20.9

19.1

34.2

28.7

30.4

27.6

Private and other payors

12.1

12.8

15.6

16.8

11.0

10.9

12.1

13.1

Quality mix

42.4

41.2

36.5

35.9

45.2

39.6

42.5

40.7

Medicaid

57.6

58.8

63.5

64.1

54.8

60.4

57.5

59.3

Total skilled nursing

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

THE ENSIGN GROUP, INC. SELECT PERFORMANCE INDICATORS (Unaudited)

The following tables summarize our
selected performance indicators for our home health and hospice segment along with other statistics, for each of the dates or periods indicated:

Three Months EndedDecember 31,

2015

2014

Change

% Change

(Dollars in thousands)

Results:

Home health and hospice revenue

Home health services:

$

13,503

$

8,639

$

4,864

56.3

%

Hospice services:

13,344

7,442

5,902

79.3

Total home health and hospice revenue

$

26,847

$

16,081

$

10,766

66.9

%

Home health services:

Medicare Episodic Admissions

2,191

1,768

423

23.9

%

Average Medicare Revenue per Completed Episode

$

2,856

$

2,945

$

(89

)

(3.0

)%

Hospice services:

Average Daily Census

842

493

349

70.8

%

Year Ended December 31,

2015

2014

Change

% Change

(Dollars in thousands)

Results:

Home health and hospice revenue

Home health services:

$

47,955

$

29,577

$

18,378

62.1

%

Hospice services:

42,401

24,939

17,462

70.0

Total home health and hospice revenue

$

90,356

$

54,516

$

35,840

65.7

%

Home health services:

Medicare Episodic Admissions

7,534

5,221

2,313

44.3

%

Average Medicare Revenue per Completed Episode

$

2,929

$

2,840

$

89

3.1

%

Hospice services:

Average Daily Census

679

420

259

61.7

%

THE ENSIGN GROUP, INC. REVENUE BY PAYOR SOURCE

The following table sets forth our total revenue by payor source and as a percentage of total revenue for the periods indicated:

Three Months Ended December 31,

Year Ended December 31,

2015

2014

2015

2014

$

%

$

%

$

%

$

%

Revenue:

(Dollars in thousands)

(Dollars in thousands)

Medicaid

$

123,388

33.1

%

$

97,133

35.1

%

$

439,996

32.8

%

$

358,119

34.9

%

Medicare

104,542

28.0

81,182

29.3

395,503

29.5

313,144

30.5

Medicaid—skilled

20,698

5.5

14,583

5.3

71,905

5.4

51,157

5.0

Total

248,628

66.6

192,898

69.7

907,404

67.7

722,420

70.4

Managed care

58,395

15.6

40,480

14.6

206,770

15.4

145,796

14.2

Private and other(1)

66,132

17.8

43,491

15.7

227,652

16.9

159,190

15.4

Total revenue

$

373,155

100.0

%

$

276,869

100.0

%

$

1,341,826

100.0

%

$

1,027,406

100.0

%

(1) Private and other payors also includes revenue from urgent care centers and mobile ancillary operations.

Discussion of Non-GAAP Financial Measures

EBITDA consists of net income before (a) interest expense, net, (b) provisions for income taxes and (c) depreciation and amortization. EBITDAR consists of net income before (a)
interest expense, net, (b) provisions for income taxes, (c) depreciation and amortization and (d) rent-cost of services. Adjusted EBITDA consists of net income before (a) interest expense, net, (b) provisions for income taxes, (c) depreciation and amortization, (d) costs incurred for operations currently being constructed and other start-up operations, excluding rent, depreciation, interest and income taxes, (e) Spin-Off charges including results at three independent living facilities transferred to CareTrust in connection with the Spin-Off transaction, excluding rent, depreciation, interest and income taxes, (f) stock-based compensation expense, (g) costs incurred related to new systems implementation, (h) breakup fee, net of costs, received in connection with a public auction in which we were the priority bidder, (i) professional service fees include costs incurred to recognize income
tax credits which contributed to a decrease in effective tax rate and expenses incurred in connection with the stock-split effected in December 2015, (j) costs incurred to acquire operations which are not capitalized, and (k) operating results at urgent care centers, excluding depreciation, interest and income taxes. Adjusted EBITDAR consists of net income before (a) interest expense, net, (b)provisions for income taxes, (c) depreciation and amortization, (d) rent-cost of services, (e) costs incurred for facilities currently being constructed and other start-up operations, excluding rent, depreciation, interest and income taxes, (f) Spin-Off charges including results at three independent living facilities transferred to CareTrust in connection with the Spin-Off transaction, excluding rent, depreciation, interest and income taxes, (g) stock-based compensation expense, (h)
costs incurred related to new systems implementation, (i) breakup fee, net of costs, received in connection with a public auction in which we were the priority bidder , (j) professional service fees include costs incurred to recognize income tax credits which contributed to a decrease in effective tax rate and expenses incurred in connection with the stock-split effected in December 2015, (k) costs incurred to acquire operations which are not capitalized and (l) operating results at urgent care centers, excluding rent, depreciation, interest and income taxes. The company believes that the presentation of EBITDA, EBITDAR, adjusted EBITDA, adjusted EBITDAR, adjusted net income and adjusted earnings per share provides important supplemental information to management and investors to evaluate the company's operating performance. The company believes disclosure of adjusted net
income per share, EBITDA, EBITDAR, adjusted EBITDA and adjusted EBITDAR has economic substance because the excluded revenues and expenses are infrequent in nature and are variable in nature, or do not represent current revenues or cash expenditures. A material limitation associated with the use of these measures as compared to the GAAP measures of net income and diluted earnings per share is that they may not be comparable with the calculation of net income and diluted earnings per share for other companies in the company's industry. These non-GAAP financial measures should not be relied upon to the exclusion of GAAP financial measures. For further information regarding why the company believes that this non-GAAP measure provides useful information to investors, the specific manner in which management uses this measure, and some of the limitations associated with the use of this measure,
please refer to the company's periodic filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Report on Form 10-Q. The company's periodic filings are available on the SEC's website at www.sec.gov or under the "Financial Information" link of the Investor Relations section on Ensign's website at http://www.ensigngroup.net.